Enstar Group insiders go on $7 million buying spree

In recent days, four Enstar Group Limited (ESGR) insiders — the COO, CEO, CFO and President — purchased a total of $7 million of their own stock on the open market.

After the close on Wed. March 13, Dominic F. Silvester, the CEO and Founder of Enstar, reported a $4.7 million open market purchase of the property and casualty insurer’s shares at $169.93, increasing his holdings by 5.49%. In addition, COO Orla Gregory bought nearly $1 million of ESGR, increasing her position by 39%.

Yesterday’s buying by Enstar Group insiders brings the total shares purchased since March 8 to 41,095. The average cost was $169.38.

Filing
Date

Insider

Title

Transaction

Trade Date

Shares

Avg. Price

Total

Holdings

% Change

13-Mar-2019

Gregory Orla

Chief Operating Officer

Mkt Buy

12-Mar-2019

5,820

171.25

$ 996,675.00

20,866

39%

13-Mar-2019

Silvester Dominic Francis Michael

Chief Executive Officer

Mkt Buy

12-Mar-2019

27,512

169.93

$ 4,675,180.00

533,507

5.49%

13-Mar-2019

Silvester Dominic Francis Michael

Chief Executive Officer

Mkt Buy

11-Mar-2019

263

164.88

$ 43,363.40

505,995

12-Mar-2019

Bowker Guy Thomas Anthony

Chief Financial Officer

Mkt Buy

08-Mar-2019

1,500

160.52

$ 240,780.00

4,521

50%

08-Mar-2019

O’Shea Paul James

President, Director

Mkt Buy

06-Mar-2019

6,000

167.41

$ 1,004,460.00

201,335

3%

The cluster buying by ESGR executives is the most by officers since at least 2003.

Enstar Group Insiders bought following recent share price drop

Enstar Group insiders bought after ESGR stock dropped as much as 12.6% in the wake of a Q4 earnings report showing a $7.84 loss per share for 2018. That compared to net earnings of $15.95 per share for 2017.

Enstar Group stock since 2014. Source: Interactive Brokers

According to its 10K, “Enstar acquires discontinued or run-off business (unwanted liabilities) from insurance companies by acquiring either specific portfolios or whole firms. It then manages the run-off by settling claims in a professional manner until the liabilities are exhausted.” The company also manages specialty active underwriting businesses.

The company states that its “fundamental corporate objective is growing our net book value per share. We strive to achieve this primarily through growth in net earnings from both organic and accretive sources, including the completion of new acquisitions, the effective management of companies and portfolios of business acquired, and the execution of active underwriting strategies.”

Also from the company’s 2018 10K:

During 2018, our book value per share on a fully diluted basis decreased by 2.0% to $155.94 per share. The decrease was primarily attributable to net losses of $162.4 million, which were primarily driven by unrealized losses on investments and by adverse development in the reserves for our StarStone segment.

Enstar has consistently grown book value

As seen below, Enstar Group has consistently grown book value, however 2018 saw a drop of over 2% in book value.

YEAR

Diluted Book Value Per Share

BV % CHG

Stock Price

Price to Book Ratio

Q4 2018

155.94

-3.20%

174
(current)

1.12

Q3 2018

161.1

-0.35%

208.5

1.29

Q2 2018

161.67

2.94%

207.3

1.28

Q1 2018

157.06

-1.34%

210.25

1.34

Q4 2017

159.19

3.69%

200.75

1.26

Q3 2017

153.53

1.97%

222.35

1.45

Q2 2017

150.56

2.69%

198.65

1.32

Q1 2017

146.62

2.05%

191.3

1.30

Q4 2016

143.68

0.57%

197.7

1.38

Q3 2016

142.86

6.07%

164.47

1.15

Q2 2016

134.68

1.38%

161.99

1.20

Q1 2016

132.85

2.47%

162.58

1.22

Q4 2015

129.65

3.15%

150.04

1.16

Q3 2015

125.69

1.53%

150

1.19

Q2 2015

123.8

2.62%

154.95

1.25

Q1 2015

120.64

1.19%

141.86

1.18

Q4 2014

119.22

4.00%

152.89

1.28

Q3 2014

114.64

0.61%

136.32

1.19

Q2 2014

113.94

6.55%

150.73

1.32

Q1 2014

106.94

1.65%

136.31

1.27

Q4 2013

105.2

NA

136.85

1.30

Enstar Group’s largest shareholder is Hillhouse Capital Management with an 8.14% stake. The managing director of Hillhouse, Jie Liu, is a member of Enstar’s board. Private equity firm Trident V owns 7.62% of ESGR, including 285,986 shares added during Q4 of 2018.

ESGR, with a book value of $3.72 billion, is thinly traded — average daily volume over the last 90 days was 43,500.

Disclaimer: Do not construe anything written in this post or this blog in its entirety as a recommendation, research, or an offer to buy or sell any securities. Everything in this blog is meant for educational and informational purposes only. Do your own research before investing and don’t risk more than you can afford to lose. This article expresses my own opinions, and I am not receiving compensation for it (other than from WhaleWisdom). I do not have a business relationship with any company whose stock is mentioned in this article. I or my associates may hold positions in the stocks discussed.

Mark Gaffney is an investor and money manager with over two decades experience analyzing and profiting from the SEC filings of "Whales" -- elite managers and corporate insiders with superior information.
mark@gaffneycapital.com